U.S. Department of Health and Human ServicesU.S. Department of Health and Human Services
This report was prepared under contract #HHS-100-80-0157 between the U.S. Department of Health and Human Services (HHS), Office of Social Services Policy (now the Office of Disability, Aging and Long-Term Care Policy) and Mathematica Policy Research, Inc. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact the office at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. The e-mail address is: webmaster.DALTCP@hhs.gov. The DALTCP Project Officer was Robert Clark.
The U.S. Department of Health and Human Services established the National Long Term Care Demonstration to test two channeling models for organizing community care for the elderly. Both models offered individuals who were at risk of institutionalization a systematic assessment of their needs and ongoing case management to arrange and monitor the provision of services. The models differed with respect to how community services were provided to clients. One model, the basic case management model, managed services that were available to clients in the community and added a modest amount of funding for purchasing services that were unavailable through other sources. The second model, the financial control model, expanded the range and availability of publicly financed services but, at the same time, instituted cost control features that placed a cap on average and per-client expenditures. The overall evaluation was designed to determine the impact of the two models on the utilization of services and informal caregivers and on client well-being, as well as to assess the feasibility of implementing future channeling-type programs and the cost effectiveness of the channeling concept.
In this report we examine a small but key aspect of channeling: the costs of operating the demonstration. We estimate the total and average costs incurred by the 10 demonstration projects that implemented the channeling intervention, as well as the total costs of the state agencies that oversaw the projects and the technical assistance contractor. This cost information provides quantitative information about the magnitude and allocation of the resources used to implement channeling. It thus provides important background for understanding the nature of this intervention and for budgeting any future efforts in this area. The analysis covers costs incurred from the beginning of active demonstration planning (September 1980) up through a period of sustained full-scale operation (June 1984). The demonstration's closeout period (July 1984 to March 1985) is excluded. While all costs are reported, the report focuses on the costs during the steady state phase between October 1983 and June 1984. During this time, the demonstration most closely resembled an ongoing nondemonstration program, since the phase emphasized providing ongoing service to clients rather than building caseloads.
We disaggregated case management costs into two general types--initial costs and ongoing costs, which were quite similar under the two channeling models. The initial costs include the one-time-only functions associated with identifying and enrolling a client. Specifically, these were the costs for case finding, screening, baseline assessment, initial care planning, and their related administrative, provider relations, and clerical support. The basic case management model projects spent $330 per client for these initial functions, while financial control model projects spent an average of $346. Ongoing costs were incurred to provide ongoing case management services plus the associated administrative, provider relations, and clerical support. The basic model projects spent an average of $92 per casemonth for these ongoing services, and the financial control model projects spent an average of $86 per casemonth.
Of course, while average case management costs were similar under the two models, the ten demonstration projects exhibited considerable cost variation. While it is difficult to identify all the causes for this variation, project scale, staff wage levels, general organization and management practices, client attrition rates, local environment, and the geographic dispersion of clients all seemed to be an influence.
The administrative, provider relations, and clerical costs were a major component of project case management costs. We estimate that they accounted for approximately 40 percent of the initial costs under both models. Furthermore, we estimate that they accounted for 45 percent of the ongoing costs under the basic model and 59 percent of ongoing costs under the financial control model. The higher administrative costs for the financial control model appear to reflect the operational costs of its data system to monitor expenditures for direct services.
While the projects were similar in terms of their average expenditures for case management services, their expenditures for direct services differed substantially. The basic model projects spent approximately $38 per casemonth for direct services, while the financial control model projects spent $471 per casemonth. This difference reflects the pooling of funds from Medicare, Medicaid, and other public sources under the financial control model, as well as the relatively limited funds available to the basic model projects to fill service gaps. Of course, these expenditures represent only part of the total spent on services for clients and should be considered along with the expenditures and savings for all funding sources and for all services. (This comprehensive view is presented in an associated benefit-cost report.)
Our analysis of case management costs also revealed the following findings about the overall costs through June 1984:
The ten demonstration projects incurred costs of $23 million as they prepared for and subsequently provided case management and long term care services to clients between September 1980 and June 1984.
In addition to the project costs, the states spent $2.8 million and the technical assistance contractor spent $1.6 million between September 1980 and June 1984.
During the period studied, the basic case management projects enrolled 3,300 clients; the financial control projects enrolled 3,900 clients. Altogether, over 51,000 ongoing casemonths of service were provided by the 10 projects.
The five basic case management projects spent $4.6 million and the five financial control projects spent $5.1 million to perform the core channeling and administration functions (case finding, screening, initial needs assessment, initial core planning, and ongoing case management) through June 1984.
In addition, through June 1984, the five financial control projects spent $12 million to purchase direct services, while the five basic case management projects spent only $800,000 for direct services. The projects spent most of this money for homemaker/personal care, skilled nursing, and home health aide services.
The cost estimates presented here correspond to the demonstration as it was fielded. They therefore reflect the small scale, extra administration, and research activities that are part of a demonstration. The research costs were estimated to be about one percent of total project-level costs. The net effect of the other demonstration-specific features is unknown. Resources were also used by the federal government in its oversight role. These costs are excluded from our analysis because accurate data about their magnitude are unavailable.
Other literature about channeling-type projects indicates that estimated average costs for channeling are comparable with those of other demonstrations. This comparability suggests that these cost estimates should provide a good foundation for budgeting future channeling programs, although the substantial cross-project variation in costs observed in the channeling demonstration suggests that program size, specific management policies, and local environments play a strong role in determining actual costs.
The cost analysis of different case management functions, the key analytical element in our evaluation, is presented in Chapter IV of the full report. The comparison with case management costs in other community care demonstrations is presented in Chapter V. We also present essential background information on the projects--our data, total costs, and the number of clients served--in the first three chapters. Other relevant information is presented in a process analysis report and a benefit-cost analysis report.